N.C. homeowner's insurance to rise average 7 percent

By JANNETTE PIPPIN - Daily News Staff

Published: Tuesday, March 5, 2013 at 03:35 PM.

These rate increases apply to the homeowner’s base policy. Homeowners who have policies through the N.C. Insurance Underwriting Association, known as the Beach Plan, will also see indirect increases due to the approved increases in homeowners insurance rates.

Kerry Hall, director of public information for the Department of Insurance, said costs of the Beach Plan increase in relation to increases in the base homeowner rates. Beach Plan coverage rates, she said, are a percentage higher than the base rate in the private market. Those homeowners pay a 5-percent surcharge for wind coverage above what a policy would be in the standard market. For those with full coverage — including homeowner — through the Beach Plan, the surcharge is 15 percent.

That means an additional impact for homeowners who have coverage through the Beach Plan. Their rates will now be the increased private market rate plus the respective surcharge based on their coverage.

NC-20 said there are approximately 135,000 homeowners with wind coverage through the Beach Plan.

Cothran says the rising costs are a concern for the organization and its members.

“The cost of homeowners insurance affects housing affordability and can damage an economy and housing market still in the process of recovering,” she said.

Eastern North Carolina counties have been at the forefront of efforts challenging a rate increase.

There was disappointment in coastal communities Tuesday as news spread about a settlement with insurance companies that will mean a hike in rates for homeowners across the area.

The N.C. Department of Insurance announced that Commissioner Wayne Goodwin signed a settlement agreement with homeowner insurance companies allowing an average statewide rate increase of 7 percent effective July 1.

However, the beach communities in the area will see nearly a 20-percent increase, the highest in the state. The remainder of Onslow, Carteret, Pender, New Hanover and Brunswick counties will see an increase of 8.6 percent.

The Swansboro Area Chamber of Commerce had adopted a resolution opposing the rate hike request, and President Cirila Cothran expressed disappointment in the settlement on behalf of the chamber’s 255 members.

“While we acknowledge that the increase will be less than the N.C. Rate Bureau originally filed, an increase of 8.6 percent and 19.8 percent in the territories where the majority of our members reside is a tough blow right now,” she said. “The rates in Eastern North Carolina have historically been significantly higher than other areas of the state, even though information shown in the 2011 N.C. Severe Weather map from NOAA indicates that the entire state is at risk of severe weather and catastrophes. Now we will be bracing for an increase which exceeds the statewide average increase of 7 percent.”

These rate increases apply to the homeowner’s base policy. Homeowners who have policies through the N.C. Insurance Underwriting Association, known as the Beach Plan, will also see indirect increases due to the approved increases in homeowners insurance rates.

Kerry Hall, director of public information for the Department of Insurance, said costs of the Beach Plan increase in relation to increases in the base homeowner rates. Beach Plan coverage rates, she said, are a percentage higher than the base rate in the private market. Those homeowners pay a 5-percent surcharge for wind coverage above what a policy would be in the standard market. For those with full coverage — including homeowner — through the Beach Plan, the surcharge is 15 percent.

That means an additional impact for homeowners who have coverage through the Beach Plan. Their rates will now be the increased private market rate plus the respective surcharge based on their coverage.

NC-20 said there are approximately 135,000 homeowners with wind coverage through the Beach Plan.

Cothran says the rising costs are a concern for the organization and its members.

“The cost of homeowners insurance affects housing affordability and can damage an economy and housing market still in the process of recovering,” she said.

Eastern North Carolina counties have been at the forefront of efforts challenging a rate increase.

Insurance companies, represented by the North Carolina Rate Bureau, were proposing a statewide average rate of 17.7 percent, with a proposed increase of 30 percent requested across Eastern North Carolina.

The settlement lowers the proposed rate increases; but that was little consolation to NC-20, an advocacy group for the state’s eastern counties has opposed the rate hike.

“We have opposed an increase in the rates. They are too high already and we don’t think an increase is justified,” said Tom Thompson, chairman of the NC-20 board of directors.

Thompson said they will hold a spring symposium April 12 in New Bern and will be discussing the issue further. He said the group is already part of a multi-state effort to improve access to homeowners insurance.

“We’ll be looking for solutions,” he said.

A large contingent of community members from Onslow County traveled to Raleigh in October for a public comment session on the rate request.

A hearing was scheduled by Insurance Commissioner Wayne Goodwin for June, but the settlement eliminated the need for it.

According to a news release announcing the settlement, department of insurance experts studied the rate request and felt some increase was justified, largely due to the rising cost of reinsurance related to hurricane risks and ongoing concerns about availability.

The settlement was done to minimize the increase, the department said.

Local officials disagree.

Onslow County Deputy Manager David Cotton said the opposition has been backed by sound data and facts. Information on historical claim loss didn’t justify the need for an increase.

“I understand the Department of Insurance has a balance to maintain, but I know we have a strong position based on data and facts that support no increase,” he said.

Emerald Isle Mayor Art Schools said the issue is a complicated one, but he does not see how the claims history could warrant an increase.

“I’m very disappointed to see an almost 20-percent increase in rates for Carteret County, especially on top of the fact that we are already paying four to five times more than other parts of the state,” he said.

Opponents of the rate increase have noted the disparity in the rates across the state, which they said they continue to see in the settlement.

Some areas of the state will see rate increases as low as, for example, 1.1 percent in Winston-Salem and Greensboro and 2.8 percent in Durham and Raleigh.

RALEIGH (AP) — North Carolina's top state insurance regulator signed an agreement Tuesday allowing companies to raise homeowner's insurance policies by a statewide average of 7 percent a year starting in July.

Insurance Commissioner Wayne Goodwin agreed to a rate increase for less than the 17.7 percent the North Carolina Rate Bureau requested in October. Goodwin said two weeks before the November election that decided whether he kept his job that companies would have to justify their request, which insurers had wanted to take effect in June.

“Homeowners insurance is a very complex issue. We face a great challenge in making sure that it is not only affordable, but available, to consumers across the state,” Goodwin said in a statement. “I feel this settlement helps strike that balance, and I am pleased that the increase will be significantly smaller than what insurers originally requested.”

The last homeowner's insurance rate increase took effect in 2009. The insurance companies had sought a 19.5 percent statewide average increase, but settled for 4 percent.

Homeowner's insurance rates this year will be allowed to increase by as little as 1 percent in Winston-Salem and Greensboro. Charlotte homeowners could see their costs climb by 8.4 percent, raising the premium on a $150,000 frame home by $45 to $574 for a yearly policy. Durham and Raleigh rates would be allowed to climb by 2.8 percent, pushing premiums to $682 for a $150,000 home.

But homes along the beach in Brunswick, Carteret, New Hanover, Onslow and Pender counties could be hit by a premium of as much 19.8 percent. Beach homes in Currituck, Dare and Hyde counties could see a 17 percent rate increase.

State insurance regulators determined much higher rate increases for beach homes were appropriate because insurers faced higher costs of backing hurricane risks, Goodwin's office said, and out of concern about companies dropping coverage and making it less available along the coast.

The settlement eliminates the need for a June hearing where the companies and Insurance Department staffers were scheduled to present arguments for and against the industry's October increase request.